United States v. Sealy, Inc.
United States Supreme Court
388 U.S. 350 (1967)
- Written by Heather Whittemore, JD
Facts
Sealy, Inc. (defendant) gave licenses to approximately 30 mattress and bedding manufacturers (the licensees) allowing the licensees to make and sell products under Sealy’s name and trademarks. The licensees also owned most of Sealy’s stock and controlled a majority of Sealy’s board of directors and executive committee. Through these positions, the licensees controlled the granting of licenses. The Sealy licenses gave each licensee the exclusive right to make and sell Sealy products in the licensee’s designated geographic area. The licenses also fixed the prices at which companies that purchased mattresses and bedding from the licensees could resell the products to consumers. The United States government (plaintiff) alleged that Sealy violated § 1 of the Sherman Act and unreasonably restrained trade by conspiring with its licensees to fix prices and allocate exclusive geographic markets. The district court held that the price-fixing agreements violated § 1 but that the market allocation was a lawful vertical restraint on trade imposed on the licensees by Sealy. The government appealed, arguing that the market allocation was an illegal horizontal restraint created by the licensees themselves.
Rule of Law
Issue
Holding and Reasoning (Fortas, J.)
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